Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

Changes - miscellaneous (A-F): Effective date of a change of circumstances (Info)

This instruction outlines the general principles for determining the effective date of a change of circumstances.

Note: From 6 April 2012, if a customer tells us within a month about a change of circumstances that results in an increase in tax credits, their award can be amended from the date of the change. For changes notified after one month, their award can only be amended one month prior to the date the change was notified.

Note: Before making any changes, you must follow the guidance in TCM0042260.

The effective date for a change of circumstances is the date from which the new circumstances are taken into account for the purpose of calculating award entitlement.

When applying a change of circumstance, you must follow the specific guidance relevant to the type of change.

Note: The effective date for a change is not always the same as the date that the change actually occurred.

Note: The effective date for a change in respect of a claim from a same sex couple can never be earlier than 05/12/2005, when the Civil Partnership Act came into force. The computer will automatically restrict backdating so that the effective date is not earlier than 05/12/2005 when a change of circumstances is applied to a claim from a same sex couple.

Note: The Marriage (same sex couples) Act 2013 extended marriage to same sex couples.  See TCTM06100 for the definition of a couple.

Note: From 6 April 2011 the baby element has been withdrawn. Any new claims made after this date with a baby under the age of one year that requires backdating into the previous year will only receive the baby addition of the family element for any entitlement in the 93 days prior to 6 April 2011.

The effective date of a change is represented by the date in the Include From field on the computer. In most types of change, this can be viewed as it is recorded in the Signal History screen.

Where a date in the Include From field is later than the date in the Start Date field, the computer will ignore the date in the Start Date field and use the later date in the Include From field as the effective start date of the change.

The date a change actually occurred is represented in the Signal History screen, by the date in either

  • the Start Date field

or

  • an End Date field.

The effective date of the change is dependent upon both

  • the date the change occurred

and

  • the date that the change was first notified.

Determining the date that the change occurred

To determine the date that the change occurred, you must use the earliest date that the Tax Credit Office (TCO) was notified of a change as the date the change occurred, where the date that a new (previously not applied) change of circumstances occurred, is

  • not reported

or

  • not known.

Note: Where a change of circumstances has previously been applied, the date that the change occurred will be represented by the relevant date in the Start Date or End Date fields recorded on the computer. Or, if the dates in the Start Date or End Date fields are not appropriate, it will be represented by the date the change was processed.

Top of page

Determining the date that the change was notified

To determine the date that the change was notified, you must use the earliest date that the customer notified the TCO about their new circumstances. For example

  • where the change of circumstance is notified by letter the date, stamped as being received, must be used
  • where a change of circumstances has previously been notified, this may be recorded in Household Notes.

Top of page

Changes notified within one month

Providing that the change is notified within one month (of the date it occurred), the effective date will always be the date that the change occurred.

Top of page

Changes over one month old

Where the change in circumstances is more than one month old, you must consider whether it is appropriate to either

  • restrict the effective date to a maximum of one month prior to the date notified

or

  • backdate the effective date more than one month.

Note: Where a date is entered in the Start Date field for a change of circumstances that is more than one month old, the computer will automatically restrict the backdating of the change to one month prior to the processing date of the claim.

Top of page

Restricting the change of circumstances effective date

The effective date for a change in circumstances will be restricted to a maximum of one month if the

  • customer failed to notify the change within one month from the date on which the change occurred (that is, started)

and

  • the change of circumstances would result in an increase to the maximum tax credits award.

Note: When applying a three-month change of circumstances backdating restriction, you must ensure that the date in the Include From field is set to one month prior to the date notified. Where the effective date (the date in the Include From field) is restricted, the computer will calculate entitlement on the new circumstances from the date of the restriction (that is, the date in the Include From field).

Top of page

Backdating the change of circumstances effective date beyond one month

The effective date for a change of circumstances will be backdated more than one month when

  • the change of circumstances occurred more than one month ago

and

  • the customer first notified TCO about the change within one month of the date it occurred

or

  • the change of circumstances would not result in an increase to the maximum tax credits award.
  • Note: An increase to a maximum tax credits award is an increase to the elements of entitlement as a result of a change in circumstances. For example, adding a child, increasing hours from 16 to 30, starting childcare.

Income changes have no bearing on the maximum tax credits award and will not produce an increase in elements. The increase in income is irrelevant to the backdating decision, as it does not affect the maximum award (though it may affect the actual award calculation through the income taper amount)

Top of page

A change of circumstances effective date can impact the claim effective date

If the change of circumstances includes a new effective date, which is earlier than the date the claim is currently effective from, the computer may consider whether to backdate the claim to the earlier date. This earlier date may then be used as the start date of the new award period.

Note: The computer will not consider backdating the effective date of the claim on certain cases, as a result of a change of circumstances. These cases will be paid from the date the claim was received. For more information on cases where the effective date is restricted follow the guidance in TCM0022000.

Where you are entering a new period of history containing a new Start Date and a new End Date which are both more than one month prior to today’s date, the computer will set an effective End Date of 05/04/03. As this is prior to when tax credits began, this period of history will be ignored when calculating entitlement. The effective End Date is not visible on the computer, but the date in the Include From field will default to 05/04/03.

If it’s appropriate for the period of history to be ignored, you must record a note in Function MAINTAIN HOUSEHOLD NOTES stating that if the date in the Include From field is ever amended, then the period of history must be deleted and re-entered.

If the customer first notified the change within one month and it is not appropriate for the period of history to be ignored, you must

  • delete the period of history
  • enter the period again
  • update the date in the Include From field .

For example: the customer is entitled to WTC and is working 16 hours from 05/04/03 to 29/06/03 and working 30 hours from 30/06/03. The computer has set the effective date to 05/04/03 and will not take the period 05/04/03 to 29/06/03 into account for eligibility.

Where you have established that the effective date of a change of circumstances is incorrect, follow the guidance in TCM0044220 or TCM0034280.